[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (1999, Book II)]
[July 7, 1999]
[Pages 1154-1159]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks in a Roundtable Discussion on Small Business Development in 
Phoenix, Arizona
July 7, 1999

    The President. Thank you very much. First, I want to thank Ed 
Pastor for making me feel so welcome and for being 
my friend and doing a wonderful job for you back in Washington, DC. He 
has the respect of every Member of Congress, and when he talks, we all 
listen.
    I want to say to all of you that I am honored to be back in Phoenix. 
Arizona has been very good to Hillary and to me and to the Vice 
President and Mrs. Gore, not only in voting for us in the last election 
but in proving that the philosophy of government and the policies we've 
followed can bring us together and make us a stronger country. So I want 
to begin by saying a simple ``thank you.''
    I'd like to thank the people who have come here with me today. 
Congressman Pastor mentioned Congressman Kanjorski from Pennsylvania, Congressman Clyburn from South Carolina, our Small Business Administrator, 
Aida Alvarez, and my Deputy Chief of Staff, 
Maria Echaveste; they are all here and 
others. I thank them.
    I'd like to thank the Reverend Jesse Jackson for coming on this tour with me, along with the 
business leaders; thank you. I know there are some public officials 
here. I think Janet Napolitano, your 
attorney general, is here; she met me at the airport. Jim Hill, the State treasurer of Oregon, is here. Thank you both.
    I'd like to thank the business leaders here with me: Leo 
Guzman, Marianne Spraggins, Gene Humphrey of Enron, 
Steven Burd of Safeway, John Corella of Corella Electric, Myrna Sonora of KTVW 33--some of you probably watch that--
[laughter]--Mike Welborn of Bank

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One, Andy Gordon of Arizona Multibank, Frank 
Ballasteros of MICRO, Leonard 
Moreno of Moreno Welding, Yolanda 
Kaizer of Builder's Book Depot; and 
obviously, I'd like to thank our host, Josie Ippolito, and all the other wonderful women in this remarkable 
family that own this group.
    Ed already said why we're here, and I'm here mostly to listen to the 
people here. But I want to make a very important point. I want you to 
know why we are here. We are here because we have the longest peacetime 
expansion in history, almost 18 million new jobs since I took office, 
the lowest unemployment rates among Hispanic-Americans and African-
Americans ever recorded. Our country has been really blessed by these 
good economic times. It has contributed to giving us the lowest crime 
rate in 25 years, the lowest welfare rolls in 30 years, declining rates 
of teen pregnancy and drug abuse. We have 90 percent of our little 
children immunized against serious childhood diseases for the first time 
in the history of our country.
    But we know, as blessed as America has been, not every American has 
been blessed by this recovery. All you've got to do is drive down the 
streets here in south Phoenix to see that. So what we are doing is going 
around the country to say we can do better, that morally, now that we're 
doing so well, we have an obligation to give every American who is 
willing to work for it a chance to walk across that bridge into the 21st 
century with us so we go forward together, leaving no one behind. And 
not only that. It's good economics.
    A long way from south Phoenix, I have to worry every day about how I 
can keep creating jobs so you have more people to buy these wonderful 
products you are producing. I mean 840,000 a day. That's a lot of 
people, you know. Of course, not everybody eats as many at one sitting 
as I do. [Laughter] So, I mean, it's a lot of people. So I think about 
that.
    How can I do that? Well, we can sell more of our products overseas, 
which we're trying to do. We can take more people off welfare or 
disabled people and help them get in the work force, which we're trying 
to do. But the easiest way to keep America's economy going strong is to 
get more investment, create more jobs, and create more consumers in the 
neighborhoods, in the cities, and in the rural areas, and on the Indian 
reservations which have not yet felt this recovery. That's what this 
whole thing is about. How we can do this together?
    And I'm here to make three points: Number one--and I want to give 
some specifics in a minute--we've been working at this for 6\1/2\ years 
with our empowerment zones and our enterprise communities and our 
community development banks--you have one here--with the vigorous 
support of the Community Reinvestment Act.
    Number two, therefore, American business needs to know that there 
are good opportunities right now in inner cities and in rural America. 
This is not about charity; this is about how to make money by helping 
people who are willing to work for themselves get the chance to do it, 
to start those businesses or become good employees. That's what this is 
about.
    Finally, it's about supporting our new markets initiative, which 
seeks to make it easier for people to get equity capital to start or 
expand their businesses in any poor neighborhood or underdeveloped area 
anywhere in the United States of America. So that's why we're here. And 
that's the message you're sending out here in south Phoenix to every 
community in America where there are good people who need investment and 
jobs.
    Now, let me say that there are a lot of good things that are 
happening, and I want to thank some of the people who are here. I want 
to thank Safeway for the new store at 16th Street and Southern Avenue, 
and the new shopping center that it will anchor. That will create a lot 
of jobs, and interestingly enough, we're trying to highlight this 
everywhere. Because in almost every city in America, even with high 
unemployment, there are obviously a lot more people working than not 
working, and there is more purchasing power in our cities than there are 
stores to take it up. So we thank Safeway.
    I also want to thank Univision, because they are about to build a 
new multimillion-dollar broadcast facility for its local station, KTVW 
33, and they're going to build it right here in south Phoenix, and that 
will help your economy to grow. Thank you. Thank you, Myrna 
Sonora.
    I want to thank the community development institutions like Arizona 
Multibank, the microenterprise organizations like MICRO. That's a fancy 
way to saying they loan small amounts of money to people to start small 
businesses who couldn't get the money anywhere else, and guess what? 
They usually make good loans, and

[[Page 1156]]

they make money doing it, by giving people a chance who couldn't get a 
chance anywhere else.
    I want to thank Arizona Multibank for launching Magnet Capital, 
which is a new venture capital fund, backed by the Small Business 
Administration, that will give lower income entrepreneurs the equity 
they need to grow and expand. So thank you very much, Mr. 
Gordon.
    Now, there's lots of other things that all you have to say. Just 
remember, we came here for three reasons. One is to show the business 
community of this country that we have the kind of partnership between 
government and the private sector that makes it more attractive to 
invest in places with higher unemployment and with too few businesses. 
Two, to make the point that there is a huge amount of opportunity out 
here right now, and the more American business knows about it, and the 
more they invest in it, the better they'll do. And three, we have a 
proposal before the Congress to go nationwide to give big tax breaks to 
people to help provide equity capital.
    And I want you to know what I'm doing. I'm basically asking the 
Congress to give investors like those on this stage with me today the 
same incentives to invest in south Phoenix that we give them right now 
to invest in the developing countries of Latin America and Africa and 
the Caribbean. I want to do that, but you should have the same 
incentives here.
    So thank you all for coming, and Congressman, the floor is yours. 
You want to introduce the folks who are going to talk? I think maybe 
you're going next, our hostess.

[At this point, the discussion began.]

    The President. Thank you very much. Let's give him a hand. [Applause] I thought that was good.
    If I could just make one point. One of the things that I learned 
traveling around the country in 1990 and 1991, before I decided to run 
for President, was that the crime rate was going down in areas where 
more police were on the street and in the communities and working with 
their neighbors, not just because they were catching people quicker, but 
because it was actually preventing crime from occurring in the first 
place.
    In the last 6\1/2\ years, we have funded 100,000 more police 
officers for our streets in small towns and rural areas as well as big 
cities, and in the budget I now have before the Congress, we're trying 
to get another 50,000 targeted at the highest crime areas in the 
country.
    So that will help. That's something that we didn't come here to talk 
about today, but if I can persuade the Congress to do that, that will 
obviously help you and others like you to locate more stores and to have 
more substations, and it will also bring the police in closer contact 
with the community and increase confidence and good feeling. So I thank 
you very much for that.

[The discussion continued.]

    The President. I want to thank you for the work that you have done. 
You know we were just together over at Chicanos Por La Causa and the 
work you did to help them set up their micro lending program. The Vice 
President, who has supervised all of our 
community economic development efforts for the last 6 years, announced 
this new SBA initiative with Aida not very long 
ago.
    But I just want to emphasize to you, we were in the Mississippi 
Delta yesterday--it was also 100 degrees there--and we were in a little 
factory that makes picture frames, that had been going into bankruptcy. 
And we met a young man that thought he could turn it around, and he had 
opened the place back up in a place with terribly high unemployment.
    But one of the people I met there was a woman who had worked for a 
small business that was doing okay, but the person running it in this 
little town, for family reasons, couldn't go on, and she was the only 
person qualified to take over this business. Otherwise it was just going 
to disappear. But she made very low wages for a person who owns a 
business, and she had no money in the bank, and because she was able to 
get some equity capital from someone as farsighted as you, her little 
business, in a year, went from 5 employees to 11 employees--instead of 5 
people losing their jobs--and a woman that never made more than a few 
dollars an hour in her life is now a successful small business owner. 
That is that sort of thing we ought to be doing more of in America. And 
if we did more of it in places like south Phoenix, the unemployment here 
would not be higher than the national average, and the incomes would not 
be lower. So I thank you very much for what you're doing.

[[Page 1157]]

[The discussion continued.]

    The President. I'd just like to make two points if I might, by way 
of completely agreeing with what you just said. First of all, for people 
who think we don't need these SBA programs anymore because the economy's 
doing so well, I would remind you that the SBA is a permanent example of 
the kind of approach that I believe we should be taking in the 
Government. The SBA basically gives people the tools to make the most of 
their own lives. They make the market more likely to work in places 
where it otherwise wouldn't work. And for people who don't think it 
matters--you know how much all these telecommunications companies are 
worth now and what's happened to the stock market in the last 6 years. 
It's more than tripled, 30 percent of our growth coming out of high 
tech. Intel and America Online--huge companies worth billions upon 
billions of dollars--started with SBA loans. And so I think, you know, 
that's enough to rest our case.
    The second thing I would tell you is, there are--not all the 
business people that have been on this trip are right here in Phoenix, 
and not all the business people who wanted to go on this trip can go. 
But there is a phenomenal amount of interest in this, and I must--I want 
to give credit to Reverend Jesse Jackson. His 
Wall Street Project has been working on this for years.
    I mean, there is a much higher level of awareness among American 
business leaders that there is money to be made and a better society to 
be made at the same time in these neighborhoods. So I don't think you 
have to worry. I think when we can finish this tomorrow afternoon in 
East L.A., you will see a much higher level of commitment and interest 
in corporate America than we had before. Thank you, Mr. 
Corella. You're great.

[The discussion continued.]

    The President. First of all, I want to thank Gene, because really, Texas is a classic example; it's almost 
exactly like Arizona and Phoenix. The unemployment rate in Phoenix as a 
whole is less than 3 percent. The unemployment rate in this section of 
Phoenix is twice the national average, maybe a little more. You have the 
same thing in Houston.
    I just want to illustrate--use Enron, which is a fabulous and very 
large energy company, to illustrate a point that he made, that I think we should emphasize because it goes 
back to something John made. One of the 
reasons we're taking this trip here is that one of the--is that even in 
business, even with a market economy, where people are always supposed 
to act in their own self-interest, people cannot do what they don't 
know, and people cannot have a relationship with people with whom they 
are not acquainted.
    And one of the things that Enron did, saying that he worked through a local community investment group, is to 
have--to literally build networks of relationships between big 
businesses and people that they would otherwise never, ever, ever come 
in contact with.
    And so, I say again, I think--you heard what Steve said about 
Safeway figuring out there was a market here. Once you begin to 
establish these networks of relationships, and once they become a part 
of the fabric of American life, then we can build an economic, a normal 
economic infrastructure in these distressed areas so that the next time 
a recession comes along, we won't be hurt so badly here. And then when 
the pickup comes, everybody will benefit instead of just a few.
    So I can't thank you enough. But I do want to emphasize what--Gene 
Humphrey was a little too modest here. We do 
have a substantial number of business leaders heading companies more or 
less in the size range of Enron, who are helping. But we are nowhere 
near where we need to be. We need hundreds, we need thousands of people 
with the kind of commitment that he's manifested, because without these 
relationships, the decisions cannot be made to put the money there.

[The discussion continued.]

    The President. I'd like to ask a question. I'd like to ask 
Frank or Andrew 
a question. What is the average size of a microenterprise loan that you 
give?
    Andrew Gordon. For the last 10 years, Mr. 
President, it has been under $2,500. And those $2,500 make a difference. 
Our default rate, after lending over $7 million in Arizona, sir, the 
default rate is less than 4 percent.
    The President. Let me say that this is--give him a hand--[applause]--this is a fairly typical 
experience worldwide.
    I got interested in this 15 years ago, when I met a man who was trained in the United

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States and went home to Bangladesh and founded--one of the poorest 
countries in the world--founded a community bank making microenterprise 
loans to poor village women, average about--then--probably $20. Today, 
they average about $50. But that's a lot of money, in American terms, 
given the size of their economy, and they had a 96 percent repayment 
rate. Now he's made millions of these loans, 
in a country with 100 million people. So I'm--one of the things I'm 
quite proud of is that now, under our administration, we now fund 2 
million microenterprise loans every year in poor, poor villages in 
Africa, in Asia, in Latin America.
    But again I say, if it's good enough for us to do for them--which we 
need to do, so those countries can keep their democracies alive and be 
good citizens and not cause wars and have a decent life--it's certainly 
good for America. And my only regret is that we don't give ten times as 
many of them every year. And if we have institutions like Arizona 
Multibank and MICRO everywhere--we have the networks out there, again, 
to make the contacts--I think there's really very little limit to what 
we can do in getting more money for microloans, because they plainly 
work.
    Is the average person, the average size of the business a single 
employee, self-employed? Or is it two?
    Mr. Gordon. It's a sole proprietor, sir.
    The President. Sole proprietor?
    Mr. Gordon. Sole proprietor. Although they 
do get help from their family. It's just--it's a family business. It's 
not only that self-employed--but that's what makes it, it guarantees its 
success, because of the support.
    The President. That's why they repay the money back, isn't it?
    Mr. Gordon. Yes.
    The President. Thank you.

[The discussion continued.]

    The President. I'd like to say something about both these 
presentations. First of all, the way the new markets initiative works in 
terms of who gets the tax credits and who qualifies, the way this works 
is, people that invest in a business enterprise can get up to a 25 
percent tax credit for the money they put up, then they qualify, for 
every dollar they put up, for $2 in bank loans that are government-
guaranteed, and the government guarantee dramatically lowers the 
interest rates on the bank loan, so that between the tax credit and the 
lower interest rates, you reduce the relative risk of investing in these 
areas to make it more attractive.
    And existing businesses qualify every bit as much as new businesses 
do. It is the area, where do the people live? What is their per capita 
income? What is the unemployment rate? How much do we need the new 
investment here? So we could never get into--it would be a bureaucratic 
nightmare to try to make distinctions between existing and new 
businesses. Everybody's eligible. It's people we're trying to help and 
places we're trying to reach.
    The only other thing I would like to say is to thank you for what Univision is doing here and for what Univision 
doubtless will do to publicize this meeting to the Hispanic world in 
America. As you know, I'm very close to Henry Cisneros, and I think that the American people should know that, 
next to the Vice President, the two people 
most responsible for everything we've done in this community development 
area over the last 6 years are the present HUD Secretary, Andrew 
Cuomo, and his predecessor, Henry Cisneros. 
So this is, indeed, something to celebrate.
    So the only thing I want to say is when you start building that 
building down here, hire some of these folks and make sure it's a good 
deal. Thank you very much. Thank you all.

Note: The President spoke at 5:55 p.m. in the La Canasta Mexican Food 
Products factory. In his remarks, he referred to civil rights leader 
Jesse Jackson; Arizona State Attorney General Janet Napolitano; Oregon 
State Treasurer Jim Hill, president, National Association of State 
Treasurers; Leo Guzman, president, Guzman & Co.; Marianne Spraggins, 
senior managing director, Smith Whiley & Co.; Gene Humphrey, president 
and chief executive officer, Enron Economic Development Corp.; Steven 
Burd, chairman, president, and chief executive officer, Safeway Inc.; 
John C. Corella, president, Corella Companies; Myrna Sonora, vice 
president and general manager, Univision 33/KTVW; Michael Welborn, 
chairman and chief executive officer, Bank One Arizona; Andrew Gordon, 
president, Arizona Multibank Community Development Corp.; Frank 
Ballasteros, chief administrative officer, MICRO; Leonard Moreno, 
president, Moreno Welding, Inc.; Yolanda Kaizer, president, Builder's 
Book Depot; Josie Ippolito, president, La Canasta Mexican Food Products, 
Inc.; Muhammad

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Yunus, founder and chief executive officer, Grameen Bank, Bangladesh; 
and former Secretary of Housing and Urban Development Henry G. Cisneros, 
president and chief operating officer, Univision Communications, Inc.